Public Private Partnerships (P3s)

Key Benefits of P3s for Residents

• Ability to access new state-of-the-art facilities
• Faster design and construction of new facilities
• Continued access to programming and services
• Projects reflect residents’ priorities
• Helps to stimulate economic growth and employment
• Minimizes impact on resident taxes
• Frees up public funds for other core services

Key Benefits of P3s for the City

• Shares risk and responsibility with private-sector partners
• Addresses key issues such as multiple demands, high expectations and pressure to reduce debts
• Accesses new sources of funds and new specialized skills
• Delivers capital projects (buildings and infrastructure) faster
• Reallocates resources to core areas under government responsibility, thereby improving the use of assets
• Increases efficiency and effectiveness
• Creates high-quality infrastructure
• Promotes transparency, accountability and in-depth cost/benefit analysis and scrutiny of proponents offering the best value
• Allocates risks to the party best equipped to manage them
• Obtains private-sector investment in public-sector infrastructure
• Enhances competitiveness

Key Benefits of P3s for the Private Sector

• Steady revenue streams linked to secure contracts
• New business opportunities
• Potential to build on the expertise of government organizations
• Sharing of risks

Policy statement

The City of Ottawa shall use a consistent governance model and selection criteria when evaluating and implementing a public-private partnership (P3) approach as an alternative means of procuring and financing City projects for infrastructure and/or service requirements.

Purpose

The purpose of this policy is to outline the City’s approach to evaluating and pursuing a potential P3 option for the implementation of a City project.

Application

This policy applies to all City of Ottawa employees.

Local Boards of the City are distinct organizations and are expected to have their own respective policies.

Policy requirements

Objectives of the P3 option

The primary objectives in delivering a City project using a P3 model are:

• To find innovative ways of effectively and efficiently addressing the priority infrastructure and service needs of the City
• To maximize Value for Money to the City by engaging private sector expertise and financing
• To pursue partnerships in which project risks related to financing, design, construction and operations are appropriately allocated between public and private sector partners

The City shall consider a project for a potential public-private partnership if the following conditions are met:

• The infrastructure/service requirement has been identified as a priority.
• The infrastructure/service requirement is included in the Term of Council priorities; Development Charges Background Study; Term of Council Capital Forecast; current approved budget; and long term capital plan, as applicable.
• Project risks related to financing, design, construction and operations can be shared and allocated appropriately between the City and a private partner.
• The City has the resources and expertise available to undertake the planning, design, procurement, monitoring and contract management processes.

P3 requirements

The City shall apply this policy and associated P3 Administrative Procedures and P3 Guidelines to all P3 projects. A project is classified as a P3 Project where:

The project includes a contractual agreement between the City and a private entity for the provision of infrastructure and services in which:

1. The private sector participant assumes the responsibility for the long-term financing for part or all of the project; and
2. The City seeks to transfer risks that it would normally assume, based on the private sector participant’s ability to better manage those risks; and
3. The arrangement includes an operations or maintenance period that extends beyond the initial capital construction of the project.

Even where an agreement meets these requirements, the project shall not be considered a P3 project where a P3 partnership has been expressly disclaimed.

Phases of a P3 project

Where a potential P3 project has been identified, the following project phases shall be followed:

• P3 project assessment
• Project initiation
• Procurement
• Implementation
• Contract management and ongoing monitoring

P3 project assessment

The department shall assess the feasibility of using a P3 approach to deliver a City project using a three-step decision-making process: an initial screening, a strategic assessment, and a business case analysis of the City’s financial risk.

Projects with potential for a P3 approach, but presenting exceptions to the P3 Project assessment criteria, should be escalated to City Council for consideration, with the exceptions highlighted and the department’s rationale for recommending the project under a P3 delivery model.

Initial screening

The initial screening of a project’s potential for a P3 approach shall assess:

• The characteristics of the infrastructure/service requirement and its risks
• The opportunities for partnering with a private sector partner in a competitive market
• The availability and expertise of City resources to undertake the planning, design, procurement and monitoring processes

Strategic assessment

Projects deemed suitable for a P3 approach under the initial screening shall undergo a more detailed strategic assessment of the potential risks and rewards available to the City and a private sector partner. Projects that demonstrate that risk can be appropriately allocated between the City and a private sector partner shall undergo a detailed business case analysis.

Business case analysis

The business case analysis shall develop a Public Sector Comparator (PSC), which is a detailed cost breakdown of the implementation and operation of a project over its expected duration under a traditional project model delivered by the City. The PSC shall be used to determine the City’s potential financial risk from procuring the project using a P3 approach delivered by a private sector partner. During the procurement process, the PSC shall be compared against the P3 project cost to determine whether positive Value for Money, or a net benefit to the City, is realized by implementing a project using a P3 delivery model.

Council authorization

The department shall seek approval from Council of the following:

1. To deliver a project using a P3 approach
2. The P3 delivery model
3. The procurement strategy
4. The preferred partner
5. Authority to finalize a business agreement.

The department shall also consider any other authority that must be sought from Council and the appropriate timing.

The department shall ensure that delegations of authority include clear reporting protocols that identify what information will be shared and when it will be shared. Additionally, the department shall communicate any restrictions, caveats, assumptions or limitations related to estimated costs.

When seeking approval for the P3 delivery model, the department shall also communicate the benefits and drawbacks of each proposed model to ensure Council is informed of the value and risks of each option. The department shall also identify types of information that will not be shared for reasons of confidentiality or integrity of the procurement process.

Project initiation

Project-specific training shall be provided to Council, as required, to ensure Council’s comprehension of the selected P3 approach, the procurement process, any time or process constraints, rationale behind decisions, including variation in budget and adjustments in scope, and Council’s role in the process.

A Project Director, appointed by the department, shall assemble a team of subject matter experts (SMEs) that includes representation from the Asset Management Branch (AMB) and Facility Operation Services (FOS) to plan the procurement strategy, the design and construction implementation, transition to operational state and contract management stages, ensuring that priorities are appropriately aligned and applied throughout the planning and implementation stages of the project. For specific projects, the City Manager may assign the lead roles to offices other than the department, as warranted. The department shall submit the recommendation for the procurement strategy and the selected P3 delivery model to City Council for consideration.

Procurement

The procurement process for all P3 projects shall be undertaken using an open, fair and transparent process, in accordance with the City’s Procurement By-law. An independent Fairness Commissioner shall be retained to oversee and monitor the fairness of the process. The department shall submit the selection of the preferred partner and the recommendation to finalize the business agreement to City Council for consideration.

The Project Director should analyze the optimal evaluation approach and technical/financial weightings for the project being procured to ensure alignment between the evaluation framework and the overall project objectives. Care should be taken to avoid complexity in the specifications and design stage whenever possible.

Concurrent with the drafting of the P3 Agreement, a comprehensive document to effectively track and monitor compliance to the P3 Agreement shall be created. The comprehensive document shall outline the key details of the P3 Agreement and highlight the following:

• Listing of all important obligations and ongoing rights of all parties
• Assigning responsibility for fulfilling each obligation or enforcing each right
• Dates when each obligation must be fulfilled or when each right may be enforced
• A process for dealing with situations that are not specific to the P3 Agreement, and which could have a financial impact on the City
• A process for dealing with potential expansion opportunities or overlapping projects, including how the balance of power between the parties already involved in the contract would not be undermined.

The purpose of this document is to aid in the administration of the contract over the life of the agreement; therefore, the document should be kept up to date.

The Project Director should be mindful of the definition of “owner” under Ontario’s Construction Act. In some instances, the P3 partner will be deemed the owner of the premises for the project. and in other instances the City will be deemed the owner of the premises. 

Implementation

The City and P3 partner shall participate in a design review process and change approval process to ensure that the design and construction phase of the project complies with the contract specifications. During the construction phase, the construction budget and build milestones shall be monitored for deviations from the contract and reported to Council as required. A transition plan shall be developed to monitor and report on activities required to bring the project to its operational state.

Contract management and ongoing monitoring

The P3 Agreement shall define the roles, responsibilities and accountabilities of the City and P3 Partner for the term of the contract, including the responsibility for project communications. Annual reports shall update Council on the P3 partner’s financial and service level performance. The P3 Agreement shall stipulate that the P3 partner shall be responsible for reporting annual budgets (for project management, preventive maintenance, etc.) and the reporting of key performance indicators. The P3 Agreement shall also contain a “right to audit” provision allowing the City to access accounting information and records from the P3 partner.

Referring to the comprehensive summary document, the Project Director shall track and monitor the P3 partner’s compliance with the P3 Agreement.

Responsibilities

City Council shall approve the authority to deliver a project using a P3 approach, selection of the P3 delivery model, the procurement strategy, selection of the preferred partner, and authorization to finalize a business agreement.

The department shall act as the administrative authority for the P3 project and shall select and lead a team of staff subject matter experts (SMEs) through the following:

• Stages of assessment
• Negotiation of legal agreements
• Implementation and project delivery
• Monitoring of technical provisions of the contract
• Reporting on the private partner’s financial and service level performance
• Conducting compliance audits
• Issuing non-performance notices
• Seeking remediation of non-performance issues
• In consultation with Legal Services, creating a comprehensive document to effectively track and monitor compliance to the P3 Agreement

The Corporate Finance Service shall be responsible for the following activities:

• Assigning the financial subject matter expert(s) who will participate in the project initiation phase and evaluation of the RFQ and RFP submissions. Financial expertise participation would need to represent both the planning/construction phase and the ongoing operating/maintenance phase of the P3 contract.
• Approving the rate, and terms and conditions, of any financing or guarantee (including proposed tender)
• Participating in the review and preparation of the detailed cost breakdown of operations over its expected life under the Business Case Analysis
• Preparing a report assessing the value of any proposed lease arrangements as per the Administration of Capital Financing and Debt Policy
• Consulting upon drafting/finalization of the P3 agreement to ensure considerations on commodity tax, tangible capital asset reporting, and treasury are identified
• Administering P3 financial requirements
• Ensuring proper financial controls/procedures are in place to comply with P3 financial terms and conditions
• Participating in the transition team and determining ongoing financial requirements and responsibilities

Supply Services shall ensure that the spirit and guiding principles of the P3 Policy are adhered to throughout the process; lead the procurement process in accordance with the Procurement By-law; and coordinate the submission of an annual report on the P3 partner’s financial and service level performance to City Council.

Legal Services shall review and approve all contractual documents that comprise the P3 Agreement.

Monitoring/Contraventions

General Managers/Directors shall oversee the assessment of P3 opportunities, selection of P3 delivery model, implementation and monitoring of the P3 Agreement and administration of P3 contracts to ensure compliance with this policy.

Supply Services shall lead the procurement process, in accordance with the Procurement By-law, and coordinate the submission of a report on contractual performance on an annual basis to ensure compliance with this policy.

An independent Fairness Commissioner, when appointed, will monitor and report on the integrity of the competitive process to ensure compliance with the Procurement By-law.

Failure to comply with this policy could expose the City to financial loss, negatively affect the City’s credit rating and borrowing capacity, and limit the City’s capacity to deliver services to the public in terms of quality, affordability, public access, health and safety, user rights, security, privacy and public input.

Recordkeeping requirements 

As per the Records Management Policy, Official Business Records generated as a result of the execution of this policy must be declared as such in the appropriate SharePoint site, RMS (Records Management System) or approved business system. 

Definitions

Department: The department assigned the lead roles for evaluating and implementing a P3 approach as an alternative means of procuring and financing City projects for infrastructure and/ or service requirements. For specific projects, the City Manager may assign the lead roles to offices other than the sponsor or client department for the infrastructure/service requirement, as warranted.

Public-Private Partnership (P3):

A project is classified as a P3 Project where:

The project includes a contractual agreement between the City and a private entity for the provision of infrastructure and services in which:

• The private sector participant assumes the responsibility for the long-term financing for part or all of the project; and
• The City seeks to transfer risks that it would normally assume, based on the private sector participant’s ability to better manage those risks; and
• The arrangement includes an operations or maintenance period that extends beyond the initial capital construction of the project.

Even where an agreement meets these requirements, the project shall not be considered a P3 project where a P3 partnership has been expressly disclaimed.

Public Sector Comparator (PSC): The hypothetical, risk-adjusted net present value cost of a project as if it were to be delivered by the public sector. It includes an estimate of the total cost of the project over its life, including costs of design, construction, maintenance and facilities management services, and adjustments for risk, insurance and taxation. The traditional PSC model is based on construction that is done on a Design Bid Build (DBB) basis, which is the traditional method of procurement of the public sector for infrastructure projects.

Value for Money (VFM): An analysis in the context of a P3 project; refers to the process of developing and comparing the total project costs, expressed in dollars measured at the same point in time, related to the estimated costs to the public sector of delivering a project using traditional procurement processes (under which total estimated costs are known as the public sector comparator(PSC), and the estimated costs to the public sector of delivering the same project to the identical specifications using the P3 approach. The difference between the PSC and the total estimated costs using the P3 approach is referred to as the VFM. If the total estimated cost of using the P3 approach is less than the public sector comparator, there is positive value for money by procuring a project using a P3 approach.

Enquiries

For more information on this policy, contact:

David Sloan, Manager, Strategic Sourcing and Supply Chain Management
Email: david.sloan@ottawa.ca(link opens email application)
Supply Services
Finance and Corporate Services Department

Application

These procedures apply to all City of Ottawa employees responsible for the assessment, initiation, procurement, implementation, contract management and monitoring of City projects for infrastructure/service requirements using a Public-Private Partnership (P3) approach.

Procedure description

These procedures provide a consistent framework for the definition, selection, analysis, financing, delivery and monitoring of major P3 projects.

The framework for undertaking a project using a P3 approach includes the following phases:

• P3 project assessment
• Project initiation
• Procurement
• Implementation
• Contract management and ongoing monitoring

P3 project assessment phase

Initial screening

The operating department uses the Initial P3 Screening Checklist (see City of Ottawa P3 Guidelines) to assess a project’s potential for a P3 approach against the following characteristics:

• Asset life: What is the anticipated useful life (i.e., service life) of this asset?
• Asset complexity: How complex is the asset with respect to construction, operations and maintenance?
• Outputs and performance specifications (construction): What is the availability of output specifications for the construction of the asset?
• Stability of operational requirements: Are the long-term operational requirements of the planned asset relatively stable and predictable?
• Performance specifications and indicators (operations period): What is the availability of operations and maintenance related performance specifications and indicators?
• Lifecycle costs: Can most of the full lifecycle costs of the asset, including construction, fit up (i.e., project costs), long-term operations and maintenance, be quantified up-front with reasonable assumptions and/or availability of historic data?
• Revenue generation: Does the planned investment have inherent scope to generate any revenue?
• Private sector expertise: How many private sector firms have the capacity to deliver and maintain this type of asset?
• Market precedents: Have investments with similar requirements, and of similar size and scale, been delivered through the P3 model?
• Nature of development site: What is the nature of the development site (greenfield vs. brownfield) and what proportion of this investment involves the expansion/renovation of existing City-owned facilities/assets?
• Scope for private sector innovation gains: To what extent will the public sector be able to rely on output/performance-based requirements/specifications?
• Potential for contract integration: Which elements of the potential P3 (i.e., design, build, finance, operate, maintain) can be integrated into one contract?
• Term of Council priorities integration: To what extent does the project respond to departmental and Term of Council priorities and budgets?
• Sufficient City resources integration: Does the City have the resources and expertise to undertake a P3 approach through all phases of the project?

The operating department informs the City Manager and Supply Services that the initial screening determined that the project has potential for a P3 approach. Projects deemed suitable for a P3 approach by the operating department will qualify for a strategic assessment and be measured against the City’s Strategic Assessment Criteria.

Strategic assessment

If a project is found to have several characteristics described in the “Screening Checklist,” the operating department selects a team of subject matter experts from internal and external resources, including a member of Supply Services, to conduct a Strategic Assessment. The Strategic Assessment allocates potential risks and rewards between the City and private partner by evaluating the project against the following risk criteria:

• Policy and planning risks
  • Legislative and City policy risk from the effect of the City’s by-laws and policies
  • Funding approvals risk from delays of internal funding approvals for capital, lifecycle and operations
• Procurement risks
  • The risk of harm to the integrity of the competitive bidding process from actual or perceived conflicts of interest; unlawful collusion among bidders; political influence; breaches of confidentiality; and errors and omissions in the procurement documents and evaluation process, etc.
  • Errors and omissions in the business negotiations and P3 agreement documents that could affect the success of the P3 project
• Design and construction risks
  • Existing site conditions risk from unanticipated liabilities and delays, including environmental conditions and statutory approvals, archaeological discoveries, native title claims, and permits and approvals
  • Design, construction and commissioning risk from quality deficiencies, schedule delays due to compliance with environmental and planning conditions, brownfield construction, design and construction coordination and deficiencies, scope changes, and delays in providing building permits and other approvals
• Operations risks
  • Facility management operations risk from the private partner’s delivery of required services
  • Network and interface risk from the dependence of service delivery on related infrastructure and compatibility with the City’s core service delivery
  • Industrial relations risk from the parameters of the City’s collective bargaining agreements and unanticipated interruptions of service delivery
  • Asset lifecycle and ownership risk from maintenance, obsolescence, and market competition that affects the project financing, revenue, and value of the infrastructure
  • Working capital risk from the private partner’s lack of financing for start-up costs and fluctuations in market demand
• Market and financial risks
  • Financial risks and benefits from the availability of private financing
  • Sponsor risk from supplier performance and contractual compliance
  • Tax risk from changes in tax legislation
  • Interest rate risk from the need to anticipate variations in the future cost of project financing
  • Market and revenue risk from the demand or lack of demand for the program services
  • Force majeure risk from catastrophic events beyond the control of the City and private partner
• Political risks
  • Political risk from public acceptance of private involvement in the delivery of City services
  • Reputational risk from the risk of failure

Each risk assessment shall include a description of the potential scope of consultant and legal services required.

Projects demonstrating that risk can be appropriately allocated between the City and a private partner qualify for a detailed business case analysis.

See City of Ottawa P3 Guidelines, Annex B – Risk Allocation for a detailed description of the criteria listed above.

Business case analysis

The operating department uses the Corporate Business Case Development Guidelines and template to conduct a business case analysis to compare the total estimated project costs of the traditional project delivery model versus the recommended P3 delivery model.

The business case analysis is a Value for Money Assessment (VFM), which includes the following steps:

• Development of the Public Sector Comparator (PSC)
• A Value for Money (VFM) exercise to compare the cost of the PSC business case under the traditional delivery model versus delivery using the P3 delivery model
• Determination of whether value will be added using the P3 delivery model, resulting in positive VFM

The operating department recommends projects to Council that demonstrate positive VFM for implementation under a P3 approach.

Project initiation phase

The Project Director initiates the project in accordance with the City’s Business Case and Project Management Policy by undertaking the following steps:

• Develops and approves a Project Charter, which defines
  • the project’s governance
  • human resource requirements
  • scope and deliverables
  • budget, schedule and milestones
  • risk parameters
  • communications strategy
  • change management strategy
  • reporting requirements
• Assembles a team of subject matter experts (SMEs)
• Develops a procurement strategy and project implementation budget, and recommends a P3 delivery model, including a consideration of the evaluation framework and the overall project objectives.
• When considering P3 delivery models, the following elements should be assessed:
  • Whether the model properly aligns the interests of the parties involved, and whether the project risks will be managed by the parties best positioned to handle them
  • Whether the transfer of specific risks, in whole or in part, is likely to encourage or undermine collaborative behaviour between the parties working on the project
  • The model’s comparative value from the perspective of quality, cost and schedule as compared with other approaches
  • The incentives and tools that each model offers to enforce contractual obligations
  • Complications with design, engineering structures, new expertise and unnecessary requirements should be avoided if possible.
  • Analyzing all parts of the project in a holistic manner, from design to operations, should be a priority in order to reduce risk and maximize public value.
  • The degree of control the government authority should retain, given the project’s circumstances and the public authority’s experience
  • Operational and maintenance requirements should be set using proven solutions from comparable projects as a benchmark.
  • The degree of flexibility each model offers to the public entity to alter the infrastructure over the project’s life without facing major contract change fees
  • The measures each model has in place to ensure public transparency, accountability and oversight of major infrastructure projects
  • The manner and extent to which each model prioritizes the public interest
• The department, in consultation with Supply Services, must develop a disclosure schedule for RFQ, RFP and project agreement documents, redacted to remove sensitive or commercially confidential information. 

Procurement phase

Supply Services leads the procurement process in accordance with the City’s Procurement By-law as follows:

• Ensures that the procurement process for all P3 projects be undertaken using an open, fair and transparent process
• Recommends that the operating department retain an independent Fairness Commissioner to oversee and monitor the fairness of the process
• Develops and issues the Request for Proposals (RFP) and gives consideration to issuing a Request for Information, Request for Expression of Interest and/or Request for Qualifications (RFQ) before issuing the RFP
• The department shall use a phased-bid compliance process, where appropriate, that provides an opportunity for bidders to modify their technical submissions to provide missing or insufficient bid information in order to comply with mandatory requirements and avoid unnecessary findings of non-compliance.
• Facilitates the provision of P3 procurement training to evaluation committee members as required, including: training specific to submission requirements and evaluation criteria, and guidance on the applicable reporting mechanisms for real or perceived wrongdoing outlined in the Employee Code of Conduct and the Fraud and Waste Policy
• Develops an evaluation scoring guide derived directly from the RFP document
• Where necessary, includes an evaluation facilitator with extensive P3 and major projects experience
• Leads and facilitates an evaluation committee in the selection and recommendation of a preferred P3 partner
• Debriefs the proponents/bidders to the RFP
• Undertakes a lessons-learned debriefing with the project team of SMEs after the award of contract and execution of the P3 Agreement

Concurrent with the drafting of the P3 Agreement, the operating department will ensure that a comprehensive document to effectively track and monitor compliance to the P3 Agreement is created. The comprehensive document shall outline key details of the P3 Agreement and highlight:

• Important obligations and ongoing rights of all parties
• Which party is responsible for fulfilling each obligation or enforcing each right
• Dates when each obligation must be fulfilled or when each right may be enforced
• A process for dealing with situations that are not specific to the P3 Agreement and which could have a financial impact on the City

The purpose of this document is to aid in the administration of the contract over the life of the agreement; therefore, the document should be kept up to date.

The Project Director shall:

• Identify evaluation team members with sufficient technical expertise and, where possible, P3 procurement experience
• Obtain guidance on the P3 process where necessary
• Request additional training in P3 procurement processes where necessary

The Project Director should be mindful of the definition of “owner” under Ontario’s Construction Act. In some instances, the P3 partner will be deemed the owner of the premises for the project and in other instances the City will be deemed the owner of the premises.

Project implementation phase

The operating department ensures compliance with the RFP specifications and P3 Agreement during the project implementation by undertaking to:

• Engage the P3 partner in a design review process to ensure that the design and construction phase of the project complies with the contract specifications
• Develop change processes to document and approve variances during construction/implementation and to address unforeseen circumstances and value engineering opportunities that arise throughout the duration of the project
• Monitor the construction budget and project milestones for deviations from the contract, and report to Council as required
• Develop a transition plan to monitor and report on activities required to bring the project to its operational state
• Where applicable, consider including a “bedding in” or “soft-start” period where the project is tested under operational conditions for an appropriate period of time
• Conduct a project implementation review three to six months after completion of the project to document “lessons learned” during the implementation phase

Contract management and monitoring phase

The operating department ensures effective contract management and monitoring of the P3 partner’s performance throughout the duration of the contract by undertaking to:

• Plan a transition process for handover of the P3 Agreement’s responsibilities and ongoing monitoring to the appropriate staff resources
• Define the roles, responsibilities and accountabilities of the City and P3 partner for the duration of the contract in accordance with the P3 Agreement
• Resolve disputes in a timely fashion in accordance with the Contract Administration Policy while ensuring that reliable public service is prioritized
• Establish the necessary reporting required for monitoring the quality of services and deliverables required by the P3 Agreement
• Submit annual reports to Council on the P3 partner’s financial and service level performance
• Referring to the comprehensive summary document, the Project Director shall track and monitor the P3 partner’s compliance with the P3 Agreement.
• Ensure that the P3 partner plans and executes a transition-out-plan prior to hand-back of the infrastructure/service to the City at the end of the agreement/term

The P3 Agreement shall contain a “right to audit” provision allowing the City to access accounting information and records from the P3 partner.

Monitoring/Contraventions

City Council shall approve the delivery of a project using a P3 approach, the selection of the P3 delivery model, the procurement strategy, the selection of the preferred partner, and authorization to finalize a business agreement.

The operating department shall monitor the construction budget and build milestones during the construction phase for deviations from the contract, and report to Council as required. In consultation with Legal Services, the operating department shall also ensure a comprehensive document to effectively track and monitor compliance with the P3 Agreement is created.

Supply Services shall coordinate the submission of the operating department’s annual report on the P3 partner’s financial and service level performance to City Council.

Legal Services shall review and approve all contractual documents that comprise the P3 Agreement.

Management shall monitor compliance to this procedure. Failure to comply with this procedure may result in disciplinary action against an employee, up to and including dismissal.

Recordkeeping requirements 

As per the Records Management Policy, Official Business Records generated as a result of the execution of these procedures must be declared as such in the appropriate SharePoint site, RMS (Records Management System) or approved business system. 

Definitions

Public-Private Partnership (P3) – A project is classified as a P3 Project where:

The project includes a contractual agreement between the City and a private entity for the provision of infrastructure and services in which:

• The private sector participant assumes the responsibility for the long-term financing for part or all of the project; and
• The City seeks to transfer risks that it would normally assume, based on the private sector participant’s ability to better manage those risks; and
• The arrangement includes an operations or maintenance period that extends beyond the initial capital construction of the project.

Even where an agreement meets these requirements, the project shall not be considered a P3 project where a P3 partnership has been expressly disclaimed.

Public Sector Comparator (PSC) – The hypothetical, risk-adjusted net present value cost of a project as if it were to be delivered by the public sector. It includes an estimate of the total cost of the project over its life including costs of design, construction, maintenance and facilities management services and adjustments for risk, insurance and taxation. The traditional PSC model is based on construction that is done on a Design Bid Build (DBB) basis, which is the traditional method of procurement of the public sector for infrastructure projects.

Value for Money (VFM) – An analysis in the context of a P3 project; refers to the process of developing and comparing the total project costs, expressed in dollars measured at the same point in time, related to the estimated costs to the public sector of delivering a project using traditional procurement processes (under which total estimated costs are known as the public sector comparator (PSC)), and the estimated costs to the public sector of delivering the same project to the identical specifications using the P3 approach. The difference between the PSC and the total estimated costs using the P3 approach is referred to as the VFM. If the total estimated cost of using the P3 approach is less than the public sector comparator, there is positive Value for Money by procuring a project using a P3 approach.

Enquiries

For more information on these procedures, contact:

David Sloan, Manager, Strategic Sourcing and Supply Chain Management
Email: david.sloan@ottawa.ca
Supply Services
Finance and Corporate Services Department

What exactly is a Public-Private Partnership?

Public-Private Partnerships (P3s) are contracts between government and private-sector partners that use creative approaches to enable the design, building, financing, operation and/or maintenance of facilities that serve the public. Sometimes, City of Ottawa P3s also involve federal and/or provincial government partners. P3 approaches enable the City to offer residents new or better facilities that it could not afford to undertake on its own, or that it does not have the specialized skills to undertake. Learn more about the City of Ottawa’s P3 approach by reading the report entitled “Public-Private Partnerships”, which was approved by City Council on 26 June 2002.

Is there a “right” way of doing a Public-Private Partnership?

There are many types of Public-Private Partnerships. The “right” Public-Private Partnership is the one that best meets the needs of the partners in the local context. One size does not fit all.

How many P3s does the City of Ottawa have underway now?

There are currently nine completed P3s (Superdome East, Bell Sensplex West, Ben Franklin Park Superdome, Richcraft Sensplex East, West Carleton Community Complex, Shenkman Arts Centre, Ottawa Paramedics HQ, Garry J. Armstrong Long-Term Care Centre and the Lansdowne Park redevelopment). The P3 for Ottawa Light Rail is currently underway.

How many more P3s are planned?

New potential P3 projects are being considered every year. As new potential P3 projects are selected, they are submitted to Committee and Council for approval to advance.

How are P3 projects selected?

As new needs arise for public facilities of all types, such as recreational facilities, health care, learning, safety or emergency services facilities, housing and transportation infrastructure, City staff review and prioritize needs and develop a list of potential P3 projects. Each of these projects undergoes an initial assessment of urgency, cost, timeline and other factors, and a short-list of potential P3s is generated and submitted to Committee and Council for action. Once approved, each P3 is then submitted to detailed needs and cost analysis, and once again submitted to Committee and Council for inclusion in budgets and authority to proceed with procurement of a private-sector partner.

How is the private-sector partner selected?

Once approved for advancement by Committee and Council, every P3 project undertakes a competitive bidding process where private-sector companies are invited to qualify and then submit their detailed proposals for the project. The proposals from qualified firms are assessed, and a preferred partner is chosen. Once that partner is selected, final aspects of the agreement structure are worked out and a contract is finalized. Committee and Council review and approve this final contract, after which construction can begin.

How does the City ensure that the private-sector partner is delivering the value promised?

The City of Ottawa closely monitors the progress of each P3 project from beginning to end. Specific aspects of the private-sector’s reporting and monitoring activities are written into each P3 agreement. If there are any concerns by the City that value is not being delivered as promised, the City and the private-sector partner work together to make appropriate adjustments to ensure that value is being delivered to both parties. In addition, the City provides annual status reports to Committee and Council regarding each P3 project to ensure the City is continuing to receive best value.

Where can I learn more about P3s?

There are many online resources that provide information on Public-Private Partnerships, as well as annual conferences such as the Canadian Council for Public-Private Partnerships annual conference held each year.

About Public-Private Partnerships (P3s)

In an increasingly competitive global environment, governments around the world are focusing on new ways to finance projects, build infrastructure and deliver services. Public-Private Partnerships (PPPs or P3s) are becoming a common tool to bring together the strengths of both public and private sectors. In addition to maximizing the efficiencies and innovations of private enterprise, P3s can provide much needed capital to finance government programs and projects, thereby freeing public funds for core economic and social programs.

On June 26, 2002, City Council received a report entitled “Public-Private Partnerships”, and endorsed the concept of using Public-Private Partnerships (P3) as a tool to identify, analyze and implement innovative opportunities for capital project development.

City of Ottawa
Supply Services
Corporate Services Department
100 Constellation Drive, 4th Floor West
Ottawa ON  K2G 6J8

Attention:
David Sloan, Manager, Strategic Sourcing and Supply Chain Management
Tel: 613-580-2424, ext. 13564
E-mail: david.sloan@ottawa.ca